Tax Cuts and Jobs Act: How will tax reform benefit individuals and families?

January 31, 2019

How will tax reform benefit individuals and families?

One of the biggest impacts taxpayers can expect involves an increase in the amount of the standard deduction. The previous amount — $6,350 for single filers — is nearly doubled under the reform, now falling at $12,000. Couples who file jointly will find that their standard deduction has risen from $12,700 to a substantially heftier $24,000.

Alternative minimum tax, or AMT, will prove less of an issue for both married and single taxpayers as well. Income exempted for couples filing jointly is increased to $109,400 from $84,500; for single filers, the amount increases to $70,300 from $54,300.

Another considerable component of the Tax Cuts and Jobs Act is the increased Child Tax Credit. Whereas filers could previously claim up to $1,000 per eligible child, the Act now allows double that amount (up to $2,000).

The bill also affords a non-refundable $500 credit for any non-child dependents. Possibly most significant of all is the fact that married couples can now make up to $400,000 before these benefits no longer apply — previously, the ability to claim these credits was limited to couples earning $110,000 or less.

Taxpayers can also now deduct up to a maximum of $10,000 in local and state taxes, though they'll have to decide whether to do so from income/sales tax or property taxes. And for those taking out a new mortgage, deductions are limited to the first $750,000 of the loan (this won't impact filers who currently hold a mortgage).